Energy price rises and price cap discussion.

[Bletchleyite]

Largely because people don't know how to use heat pumps. They should be left on more or less all the time to maintain temperature, not blasted twice a day like people do with gas boilers.

 

[Herefordian]

Those capable of insulating will be doing so already (and have only themselves to blame if they are not).

Those who aren’t need support, which I would suggest is best delivered as a charge against the house (with mortgage providers obliged to accept).



All absolutely fine, but on a 2-3 year horizon (and that’s if we pedal very hard). Given how dire things are looking, I’m not sure bill support will even help as there will be further increases. We (ie EU) have lots of good mid-term options but seem woefully lacking in short term solutions. I suspect we may start looking to geopolitical solutions soon, since we are clearly totally unprepared for the situation we are in

I doubt many of the people who would need financial support for insulation will be paying a mortgage.

If they had the money to afford a mortgage, they'd be able to afford insulation.

The ones who would need financial support will mostly be renting or be low-income pensioners who already own their dwelling.

 

[Bletchleyite]

Indeed. Landlords need to be forced to do it (or sell up). In that case I'm fine with a charge on the property. Perhaps to rent a minimum of C on the EPC?

 

[jon0844]

Can someone clarify a point for me with regards to shareholders in the energy firms that failed. Would any of those have lost out financially at the time of failure as I am unsure if their financial stake would have had protected status?

Perhaps I should have kept shareholders and the management separate, as obviously shareholders needed to get out when things were going south. However, the people running the businesses could take great salaries and bonuses and let the company fail when the **** hit the fan.

That's so often the case when you're spending other people's money (as was the case with those building up huge pots of unprotected funds that most people likely thought was being held to pay future bills and, at most, the company was earning interest on by holding it instead of the customer).

 

[najaB]

We (ie EU) have lots of good mid-term options but seem woefully lacking in short term solutions. I suspect we may start looking to geopolitical solutions soon, since we are clearly totally unprepared for the situation we are in

There is one, ready-made geopolitical solution (that won't require any boots on the ground or forced regime change): normalising relations with Iran.

Yes, they are a state sponsor of terrorism, but that is largely as a reaction to the sanctions that we in the west have maintained against them for forty years because they had the temerity to seek to choose their own government, and the fact that we turn a blind eye to the actions of Israel in the occupied/disputed territories.

 

[HSTEd]

Ultimately a lot of people desperate to deny the reality that the UK has been pursuing insane energy policies since privatisation.

They wanted a 'free market' energy system and now complain because the free market has failed to 'protect' them from a supply shock.

The purpose of the 'free market' is not to protect anyone from anything. We should not spend tens or hundreds of billions to rescue people from what they voted for.

They sowed the wind, now they reap the whirlwind.

 

[najaB]

They wanted a 'free market' energy system and now complain because the free market has failed to 'protect' them from a supply shock.

There's nothing wrong with a free market energy system - it's our poorly regulated energy market that's insanity.

 

[Herefordian]

Indeed. Landlords need to be forced to do it (or sell up). In that case I'm fine with a charge on the property. Perhaps to rent a minimum of C on the EPC?

I agree in the most part. However I think forcing a non-complying landlord to sell is a bit much.

Alternatively landlords who refuse to insulate should be financially penalised until they do so.

Perhaps a cap on the amount of rent they can charge until the dwelling is properly insulated.

 

[HSTEd]

There's nothing wrong with a free market energy system - it's our poorly regulated energy market that's insanity.

Regulation is not some magic wand that can make companies do the opposite of what the market wants.

A free market system was always going to go all in on natural gas - the 'regulation' necessary to do anything else would be so heavy handed as to make the free market totally nonfunctional.

 

[Bletchleyite]

I wouldn't enforce them selling per se, but it would be mandatory for all new rental contracts and, after a period, existing ones.

Obviously we would start with C, and improve that further (to B then A) on suitably long published timescales.

 

[tomuk]

I wouldn't enforce them selling per se, but it would be mandatory for all new rental contracts and, after a period, existing ones.

Obviously we would start with C, and improve that further (to B then A) on suitably long published timescales.

It's similar to the rules introduced a couple of years ago on the electrical installation. No satisfactory EICR (electrical installation condition report) No rental income.

 

[Herefordian]

I wouldn't enforce them selling per se, but it would be mandatory for all new rental contracts and, after a period, existing ones.

Obviously we would start with C, and improve that further (to B then A) on published timescales.

I think that's a good, fair idea.

I would also say measures are put in place to prevent the landlord passing on the cost to the tenant via increased rent.

There's nothing wrong with a free market energy system - it's our poorly regulated energy market that's insanity.

This. Ofgem is completely unfit for purpose and has failed to protect consumers.

 

[HSTEd]

I agree in the most part. However I think forcing a non-complying landlord to sell is a bit much.

Alternatively landlords who refuse to insulate should be financially penalised until they do so.

Perhaps a cap on the amount of rent they can charge until the dwelling is properly insulated.

Short of conscripting half a million peasants into labour units it will take a very long time to get a significant fraction of housing stock being insulated.

 

[tomuk]

I think that's a good, fair idea.

I would also say measures are put in place to prevent the landlord passing on the cost to the tenant via increased rent.



This. Ofgem is completely unfit for purpose and has failed to protect consumers.

They have also failed to protect suppliers either.

Arguably the price cap is very poor policy for one it has hidden previous increase from consumers which may have already prompted them to install more energy efficient systems.

 

[Dai Corner]

I would also say measures are put in place to prevent the landlord passing on the cost to the tenant via increased rent.

So he should take the property off the rental market, get the insulation sorted, and let it out to another tenant at a higher rent?

This. Ofgem is completely unfit for purpose and has failed to protect consumers.

What do you think Ofgem should do?

 

[Trainbike46]

I think that's a good, fair idea.

I would also say measures are put in place to prevent the landlord passing on the cost to the tenant via increased rent.

Unfortunately the situation in the private rental market is very much that the landlord will charge the highest possible rent they can get away with; It has very little to do with the actual quality of the house. (that is to say, The worst fraction of the houses available for rent will usually be cheapest, but if all properties have to meet minimum insulation standards that won't actually change what the landlords will be able to charge at the bottom end of the market, as the ability to pay won't have changed)

So he should take the property off the rental market, get the insulation sorted, and let it out to another tenant at a higher rent?

If they could get away with charging a higher rent, they would do that regardless

What do you think Ofgem should do?

I think they should have done their job and checked that the energy retailers weren't taking massive risks with what were in effect loans from their customers

But most of the fault lies with the government, who should have been planning long-term to reduce the risk of price shocks to our electricity market

 

[Herefordian]

Short of conscripting half a million peasants into labour units it will take a very long time to get a significant fraction of housing stock being insulated.

I'm fully aware it's going to take a long time.

The sooner it's started the sooner it's done.

They have also failed to protect suppliers either.

Arguably the price cap is very poor policy for one it has hidden previous increase from consumers which may have already prompted them to install more energy efficient systems.

Absolutely agree on both points.

So he should take the property off the rental market, get the insulation sorted, and let it out to another tenant at a higher rent?

What do you think Ofgem should do?

Excuse me? I did not say that.

I said the landlord should be mandated to insulate the dwelling and be prevented from passing on their costs to existing or future tenants.

Ofgem should do it's job of regulating the market and protecting the interests of consumers.

It has completely failed to do that.

 

[Dai Corner]

I said the landlord should be mandated to insulate the dwelling and be prevented from passing on their costs to existing or future tenants.

How do you propose to do that? A better quality property, whether it's had a new bathroom/kitchen, redecoration, a garden makeover, new heating system, replacement windows or insulation will be bound to attract a higher rent.

Ofgem should do it's job of regulating the market and protecting the interests of consumers.

Yes, but how should it do that, specifically? We've seen them capping prices and ensuring customers of failed energy traders got continuity of supply, but what else?

 

[Bletchleyite]

Landlords don't pass on costs in that way. Rent is just market rent, which depends on lots of things about the property and where it is. Charge too much and people pick a different house and yours is empty.

 

[Herefordian]

Unfortunately the situation in the private rental market is very much that the landlord will charge the highest possible rent they can get away with; It has very little to do with the actual quality of the house. (that is to say, The worst fraction of the houses available for rent will usually be cheapest, but if all properties have to meet minimum insulation standards that won't actually change what the landlords will be able to charge at the bottom end of the market, as the ability to pay won't have changed)

If they could get away with charging a higher rent, they would do that regardless

I think they should have done their job and checked that the energy retailers weren't taking massive risks with what were in effect loans from their customers

But most of the fault lies with the government, who should have been planning long-term to reduce the risk of price shocks to our electricity market

That is sadly very true. I've seen some truly awful one bed flats being rented out for as much as, or more than, a decent two bed house.

I help a friend with his property business from time to time and his are of good quality with fair rents.

They're all fully insulated too!

 

[Xenophon PCDGS]

Shareholdings are not, in any way, protected - hence the prominent warnings on stockbroking sites to that effect. For example, eTorro state:

Shareholders are treated as unsecured creditors in the event of insolvency which means they will be among the last to receive anything if the company is wound up.

Thanks for the above. Some postings that I have seen over the years on different websites making reference to shareholders seem as "spawn of the Devil" in their vitriolity, would give the impression that shareholders are "the lowest of the low" and the "enemies of the Working Class"

== Doublepost prevention - post automatically merged: 28 Aug 2022 ==

Indeed. Landlords need to be forced to do it (or sell up). In that case I'm fine with a charge on the property. Perhaps to rent a minimum of C on the EPC?

They never seem to state that aspect of it on the "Homes Under the Hammer" TV programme (the programme with a different tune for each uttered word) as the rental income is always stated.

 

[Bletchleyite]

I've just seen an article on the Grauniad about small local shops needing a subsidy.

Perhaps shops could try not lighting the place up in a manner that makes a Class 800 look dingy, leaving their lights and signs on all night (motion sensors could activate them if someone breaks in so the CCTV can do its thing) and actually fit doors to their fridges and freezers, the lack of which is absolutely insane waste? Also shops should put doors back on the entrances?

 

[DelayRepay]

Yes, but how should it do that, specifically? We've seen them capping prices and ensuring customers of failed energy traders got continuity of supply, but what else?

For a start they should have not allowed firms to use customer account credits as working capital. They only need to look to the FCA's Client Money Rules (or similar rules from the Law Society) to understand how to protect client funds by segregating it from the firm's own funds. If capital was required, this should have been provided by shareholders, or commercial borrowing at the risk of the lender. Then we wouldn't all be paying for the Supplier of Last Resort costs through our standing charges.

 

[Dai Corner]

For a start they should have not allowed firms to use customer account credits as working capital. They only need to look to the FCA's Client Money Rules (or similar rules from the Law Society) to understand how to protect client funds by segregating it from the firm's own funds. If capital was required, this should have been provided by shareholders, or commercial borrowing at the risk of the lender. Then we wouldn't all be paying for the Supplier of Last Resort costs through our standing charges.

Agreed.

I'd also suggest Ofgem should have ensured energy traders weren't taking excessive risks by offering fixed price tariffs without ensuring they could actually buy the energy they expected to supply at or below the prices they'd promised consumers.

 

[Herefordian]

How do you propose to do that? A better quality property, whether it's had a new bathroom/kitchen, redecoration, a garden makeover, new heating system, replacement windows or insulation will be bound to attract a higher rent.

Yes, but how should it do that, specifically? We've seen them capping prices and ensuring customers of failed energy traders got continuity of supply, but what else?

Landlords are not allowed to pass on costs to tenants unless it is damage caused by the tenant.

If the landlord chooses to fit a new kitchen or fit loft insulation while the dwelling is occupied it's out of their pocket.

As for Ofgem they can stop increasing the price "cap" when Centrica, Shell etc are announcing record profits.

It isn't really a "cap" if prices keep going up every three months, is it?

Landlords don't pass on costs in that way. Rent is just market rent, which depends on lots of things about the property and where it is. Charge too much and people pick a different house and yours is empty.

They're not allowed to, but I've had one who tried to when I was at university.

I was renting a room in a HMO and the whole building needed damp rectification work.

He tried putting all of our rents up, mid lease, to cover the cost of the work.

I sadly don't doubt there's still landlords out there now who'd try and do the same.

 

[tomuk]

I've just seen an article on the Grauniad about small local shops needing a subsidy.

Perhaps shops could try not lighting the place up in a manner that makes a Class 800 look dingy, leaving their lights and signs on all night (motion sensors could activate them if someone breaks in so the CCTV can do its thing) and actually fit doors to their fridges and freezers, the lack of which is absolutely insane waste? Also shops should put doors back on the entrances?

Sainsbury's have been fitting fridges with input from Williams Grand Prix Advanced Engineering which have tweaked aero to keep the cold in without doors.

MILLIONTH FORMULA ONE FRIDGE FITTED IN NEW SAINSBURY’S STORE AS SUPERMARKET DRIVES TOWARD BECOMING NET ZERO BY 2040 - Fortescue Zero

In 2017, Sainsbury’s became the first UK supermarket to invest in energy saving Aerofoil refrigeration technology, created by Aerofoil Energy and WAE.

wae.com

 

[Dai Corner]

Landlords are not allowed to pass on costs to tenants unless it is damage caused by the tenant.

If the landlord chooses to fit a new kitchen or fit loft insulation while the dwelling is occupied it's out of their pocket.

Landlords who make improvements can expect to charge a higher rent in future though, or why bother? That's what I thought you meant by 'passing costs on to tenants'

As for Ofgem they can stop increasing the price "cap" when Centrica, Shell etc are announcing record profits.

It isn't really a "cap" if prices keep going up every three months, is it?

Trouble is, if oil and gas producers can sell their products to other markets at higher prices than Ofgem sets they will, and we won't have any/enough.

 

[Bletchleyite]

Sainsbury's have been fitting fridges with input from Williams Grand Prix Advanced Engineering which have tweaked aero to keep the cold in without doors.

MILLIONTH FORMULA ONE FRIDGE FITTED IN NEW SAINSBURY’S STORE AS SUPERMARKET DRIVES TOWARD BECOMING NET ZERO BY 2040 - Fortescue Zero

In 2017, Sainsbury’s became the first UK supermarket to invest in energy saving Aerofoil refrigeration technology, created by Aerofoil Energy and WAE.

wae.com

It physically cannot be as good as the same design with a triple glazed door. The airflow improvement would of course help when the door was opened to get something.

 

[najaB]

A free market system was always going to go all in on natural gas - the 'regulation' necessary to do anything else would be so heavy handed as to make the free market totally nonfunctional.

Yes, they would. However they wouldn't have been able to run away with not protect credit balances, and closer inspection of their finances might have stopped some of the worst of the speculation.

 

[Xenophon PCDGS]

Landlords are not allowed to pass on costs to tenants unless it is damage caused by the tenant.

Was this a point of debate when landlords threated tenants with paying towards the cost of recladding buildings?